M&A Spotlight: Exclusive data provided by mergermarket, the leading provider of forward-looking M&A intelligence and research for corporates and M&A professionals.

CONTACTS

Americas: Dara Silverstein Asia-Pacifi c: Andrew Powell EMEA: Flora Wilke [email protected] [email protected] fl [email protected]

Tel: +1 646 378 3118 Tel: +852 2158 9710 Tel: +44 207 010 6348 www.mergermarket.com M&A Spotlight on and Latin America - Letter from the Bureau Chief

CONTENTS: Watch Thy Neighbor 2 Letter from the Bureau Chief Latin America’s M&A, private equity and IPO markets have shown relative resilience despite a global slowdown. 3 Heat Chart of M&A Activity in Latin America Not even the stronger turbulence felt more recently in fi nancial markets has brought dealmakers to a halt. Private equity and venture capital fi rms are still capital- 4 Chile Cross-Border M&A Activity ized after a record fundraising season that peaked in mid-2011, said one banker, explaining also that many companies closing long-term deals tend to have 5 M&A Days to Completion vs. Ease hedged their investments. of Doing Business in Latin In the three months ending in May, ’s dollar exchange rate surged 23% to over BRL 2.00, a bump that in other times would spur reconsideration of deal America and Other Emerging valuations. Markets 6 Industry Analysis of Foreign Direct From January 2012 until late May, M&A deals, as tracked by mergermarket, declined less in Latin America — about 29% globally while 24% in Latin America — as compared to the same 2011 period. Investments in Latin America YE 2007 vs. YE 2011 Despite declines, fi nancial and legal advisors consulted by mergermarket in recent weeks have kept their cool in ongoing deals, though the impact of the market’s 7 Foreign Direct Investment - Catalyst pullback has varied between countries. Chile, with its business friendly reputation, has captured a fair share of Latin America’s M&A activity. Frequently used as a for Increased Oil Production? springboard for companies wishing to enter Latin America, Chile also has a stable domestic market that has helped its own companies expand abroad. Chilean 8 Ease of Exit Analysis - Annual companies have spread their reach in 2011-12 outbound deals, such as LAN’s purchase of the Brazilian airline TAM, Corpbanca’s acquisition of Santander Colombia, and Cencosud’s buying spree in Brazil. This year, Brazil-based BTG Pactual chose Chile as a doorway to the rest of Latin America with the acquisition of Celfi n. 9 Average EBITDA Multiples (x) 10 Criteria In Brazil, the government has taken steps to counterbalance the economic slowdown with tax incentives, as the country pushes forward the infrastructure invest- ments required for the Soccer World Cup in 2014 and the 2016 Olympics. A new antitrust system just implemented is expected to speed up and modernize the M&A approval process in the country, assuming it runs smoothly.

Despite Brazil’s diffi cult environment as depicted in the World Bank’s ease of doing business ranking, global oil-related companies have been attracted by ’ USD 224bn, multiyear investment plan and other potential business stemming from the country’s mostly unexplored pre-salt ultra-deepwater reserves.

In Mexico, the top presidential candidates, whose parties had strongly opposed Pemex’s privatization, now have promised to modernize the oil sector, inspired by PRESS CONTACTS: Brazil’s experience with Petrobras.

Moreover, weaker currencies in Latin America should increase the region’s international competitiveness, while slower economic growth may bring down valua- Americas: Dara Silverstein tions in some overheated sectors. [email protected] Tel: +1 646 378 3118 Argentina’s recent expropriation of a controlling stake in Repsol YPF, if closed for the USD 10bn price Repsol is asking, would be the region’s largest “cross-border Asia-Pacifi c: Andrew Powell deal” since ’s takeover of Rinker Group in 2007. Like Mexico, other countries such as Venezuela, Bolivia and Ecuador have paid a price of closing their oil [email protected] markets to investments in some form. Argentina has seen a 82% decline in the value of M&A deals in the fi rst fi ve months of the year compared to 2011, according Tel: +852 2158 9710 to mergermarket data. EMEA: Flora Wilke fl [email protected] by Priscilla Murphy, Latin America Bureau Chief Tel: +44 207 010 6348

M&A Spotlight: Latin America 2 www.mergermarket.com

Heat Chart of M&A Activity in Latin America

Source : mergermarket The Heat Chart is based on ‘companies for sale’ stories tracked by mergermarket in Central & South America between 01/04/2011 and 31/03/2012. Opportunities are captured according to the dominant geography and sector of the potential target company.

M&A Spotlight: Latin America 3 www.mergermarket.com Chile Cross-Border M&A Activity

12,000 30

10,000 25

8,000 20

6,000 15 Value (US$m) Volume of Deals

4,000 10

2,000 5

0 0 H1 04 H2 04 H1 05 H2 05 H1 06 H2 06 H1 07 H2 07 H1 08 H2 08 H1 09 H2 09 H1 10 H2 10 H1 11 H2 11 Q1 12 Inbound Value Outbound Value Inbound Volume Outbound Volume

Source : mergermarket Excludes lapsed and withdrawn deals

M&A Spotlight: Latin America 4 www.mergermarket.com M&A Days to Completion vs. Ease of Doing Business in Latin America and Other Emerging Markets

200

180 Venezuela

160

140 Philippines India Indonesia Brazil 120 Russia Argentina Egypt 100 China

80 Turkey Czech Republic 60 Panama Poland Mexico Hungary

40 Peru Colombia

World Bank Ease of Doing Business Rankings Business Doing of Ease Bank World Chile South Africa

20 Thailand South Korea 0 0 1020304050607080

Source : mergermarket, World Bank Excludes lapsed and withdrawn deals Days to Completion of M&A Transactions Days to completion from announcement date

M&A Spotlight: Latin America 5 www.mergermarket.com Industry Analysis of Inbound M&A into Latin America - YE 2007 vs. YE 2011

Defense, -100.0%

Construction, -66.7%

Financial Services, -44.0%

Media, -42.9%

Leisure, -33.3%

Energy, Mining & Utilities, -22.2% Transportation, -12.5%

Consumer, -3.0%

Agriculture, 15.4%

Telecommunications, 33.3%

Business Services, 50.0% Pharma, Medical & Biotech, 87.5% Industrials & Chemicals, 88.6%

Real Estate, 100.0%

Technology, 650.0%

-200.0% -100.0% 0.0% 100.0% 200.0% 300.0% 400.0% 500.0% 600.0% 700.0%

Source : mergermarket Percentage change: 2007 versus 2011 Excludes lapsed and withdrawn deals

M&A Spotlight: Latin America 6 www.mergermarket.com Inbound Oil & Gas M&A - Catalyst For Increased Oil Production?

Source : mergermarket, EIA Excludes lapsed and withdrawn deals 300 First Chavez Production Expropriates From Tupi Oil Orinoco River Field Basin 250 Cantarell Production Slows Post 2003 Peak

200

150

158 2004 = 100

100 82

2004 2005 2006 2007 2008 2009 2010 2011 YTD 2012

50 BG Group Discovers Tupi Oil FIeld Kirchner Expropriates YPF

0

M&A Spotlight: Latin America 7 www.mergermarket.com Ease of Exit Analysis - Annual

Source : mergermarket Excludes lapsed and withdrawn deals

7.0x 100% 41.4% 48.1% 29.8% 20.8% 28.6% 35.2% 27.9% 15.0%

6.3x 90% 6.0x

5.7x 80%

5.0x 70%

60% 4.0x 3.8x

50% 3.3x 3.0x 40% % of Total PE Deals Buyout to Exit Ratio (x) Ratio Exit to Buyout 2.2x 30% 2.0x 1.6x 1.4x 20% 1.3x 1.1x 1.0x 10%

58.6% 51.9% 70.2% 79.2% 71.4% 64.8% 72.1% 85.0% 0.0x 0% 2005 2006 2007 2008 2009 2010 2011 2012

M&A Spotlight: Latin America 8 www.mergermarket.com Average EBIDTA Multiples (x) 23

21

19

17

15

13

Mexico Brazil 11 Colombia Multiple(x)

9 Chile

7

5

Argentina 3 012345678 Average Multiple (x) for Latin America

Source : mergermarket Average Multiple (x) for North America and Europe Excludes lapsed and withdrawn deals Average Multiple (x) for BRIC For the period between 01 /01/2004 and

M&A Spotlight: Latin America 9 www.mergermarket.com Criteria

All data is based on transactions over US$ 5m unless stated otherwise. Deals with undisclosed deal values are included where the target’s turnover exceeds US$ 10m. Deals where the stake acquired is About mergermarket less than 30% will only be included if their value is greater than US$ 100m. Activities excluded include property transactions and restructurings where the ultimate shareholders’ interests are not changed. mergermarket is a mergers & acquisitions (M&A) intelligence, news and research service.

All sector breakdowns are based on the dominant sector of the target only. mergermarket is part of The Mergermarket Group which has over 800 employees worldwide and regional head offi ces in New York, London and Hong Kong. The trend graphs are based on transactions announced in the given time periods. In any market, the life blood of advisers is deal fl ow. mergermarket is unique in the provision For this report, “inbound” refers to deals where the dominant geography of the target is Latin of origination intelligence to the investment banking, legal, private equity, acquisition fi nance, America/Chile and the dominant geography of the bidder is outside Latin America/Chile; “outbound” public relations (PR) and corporate markets. refers to deals where the dominant geography of the target is outside Latin America/Chile and the dominant geography of the bidder is Latin America/Chile. All other data sets are based on dominant With an unrivalled network of analysts covering M&A in the Americas, Europe, Middle-East, geography of target only being Latin America/Chile. Africa and Asia-Pacifi c, mergermarket generates proprietary intelligence and delivers it together with daily aggregated content, on its mergermarket.com platform and by real-time Unless stated otherwise, all data excludes lapsed and withdrawn bids. email alerts to subscribers.

All data correct as of 24 May 2012. This wealth of intelligence, together with a series of deal databases, individual and house league tables, profi les and editorial have proven time and time again that this product can and does generate real revenues for clients. This is apparent when you see that mergermarket is used by over 1600 of the world’s foremost advisory fi rms to assist in their origination process.

Contacts: Part of The Mergermarket Group Americas: Dara Silverstein [email protected] www.mergermarket.com Tel: +1 646 378 3118 80 Strand 11 West 19th Street Suite 2401-3 Asia-Pacifi c: London, WC2R 0RL 2nd Floor Grand Millennium Plaza United Kingdom New York 181 Queen’s Road, Central Andrew Powell NY 10011, USA Hong Kong [email protected] Tel: +852 2158 9710 t: +44 (0)20 7059 6100 t: +1 212-686-5606 t: +852 2158 9700 f: +44 (0)20 7059 6101 f: +1 212-686 2664 f: +852 2158 9701 Europe: [email protected] [email protected] [email protected] Flora Wilke fl [email protected] Tel: +44 207 010 6348

M&A Spotlight: Latin America 10 www.mergermarket.com